Turkey at Thanksgiving could also be a standard sight, however complete retail turkey consumption between October and December 2023 was the bottom since 1980
18 November 2024
5 minute learn
Thanksgiving is the second-largest U.S. meals vacation, driving an estimated $2.1 billion in gross sales raise at grocery shops.¹ And a turkey on the desk for Thanksgiving is a well-known sight for a lot of American households, a time-honored custom lengthy embedded in American tradition. Whether or not by way of supply-related points, shopper need for comfort, or altering preferences, the way forward for this custom and the US shopper assist to the turkey trade has turn into much less sure in recent times.
Different animal proteins are rallying to be the vacation meal centerpiece
Most shoppers take into consideration cooking a complete turkey solely yearly. And even then, consideration is in decline. Complete retail turkey consumption between October and December 2023 was the bottom since 1980, at simply 4.04 lbs. per capita. Different animal protein segments, like beef and pork, are being attentive to shifting shopper buying habits. They need in on the Thanksgiving motion, and shoppers have an interest.
Promotional exercise across the holidays drives a lot of what customers put within the cart. Thanksgiving comes with a extensively utilized retail tactic referred to as “loss-leader” to drive foot site visitors. Retailers will usually worth a turkey low, at a loss, or typically free, in hopes that gross sales on the rest of the buyer’s Thanksgiving meal purchasing cart will embody gadgets that assist offset these losses.
Whereas turkeys nonetheless prominently seem on the entrance web page of retail commercial in weeks main as much as Thanksgiving, over the previous few years USDA’s function exercise index for weeks 40-49 has proven a noteworthy decline. Frozen turkey options in these key weeks had been down 36% in 2023 from 2018 ranges. Nonetheless, whereas to not the identical diploma, ham options had been down 14% over the identical interval. This might partially clarify falling disappearance charges on the key time-frame of the yr.
Nonetheless, the info doesn’t embody “no-price” options resembling purchase one merchandise get one half off or spend a sure greenback quantity and obtain one middle of plate merchandise free (resembling a turkey, turkey breast, ham or different). Additionally, ready entrees have turn into commonplace at Thanksgiving, and that’s additionally not coated on this knowledge. Thus, we rely extra broadly on manufacturing and stock ranges to investigate complete turkey demand.
Turkey costs ought to be extra favorable for shoppers this Thanksgiving
To get an thought of what costs shoppers ought to count on on the grocery retailer this Thanksgiving, it is very important perceive that the turkey trade prepares all yr for the vacation. The vast majority of contracting for Thanksgiving turkeys usually happens within the first quarter of the yr. For instance, throughout January 2023, wholesale costs for frozen complete turkey hens reached a document of $1.71/lb., up 33% YoY and 112% increased than in 2019 (pre-pandemic). And someway retailers in essentially the most aggressive markets had been nonetheless capable of provide complete frozen turkeys to shoppers for lower than $0.30/lb. For 2024, wholesale costs had been down 50% YoY, at a median of $0.87/lb., the bottom since 2019.
Inflation has taken its toll on each producers and shoppers in recent times. Though feed corn costs have been easing from their most up-to-date peaks during the last 12 months, turkey producer prices have remained elevated since 2023, and had been down simply 18% YoY for the 12 months led to January 2024. This all means that wholesale values adjusted down extra ferociously than producer prices as producers ready turkey provides for the 2024 vacation season.
Turkey provide in decline, however the shift is probably not all that noticeable in 2024
As retailers started getting ready for Thanksgiving options this previous January, projections for turkey inventories had been reported at their lowest level in 4 many years, signaling lowered availability for Thanksgiving in 2024. Exterior of shopper desire, the animal protein trade has confronted supply-limiting challenges: excessive working prices, labor shortages, regulatory hurdles and disease-related points. U.S. turkey flocks have struggled with two ailments particularly: Extremely Pathogenic Avian Influenza (HPAI) and avian metapneumovirus (AMPV).
The U.S. turkey trade was impacted closely by depopulations in business homes, together with breeder amenities through the fourth quarter of 2023. Each viruses inflicting HPAI and AMPV have contributed to those heavy declines. Nonetheless, the first purpose for fewer turkey poult placements has been weak profitability for U.S. turkey growers.
A mess of manufacturing prices rose quickly by way of 2020 and past. Whereas some prices like feed (the most important expense in turkey manufacturing) have been in decline during the last 18 months, prices of labor, capital, packaging, power, rates of interest and different elements have all saved the poultry producer worth index from falling again to pre-pandemic ranges. Nonetheless, at lower than $0.90/lb., wholesale values for complete frozen turkeys had been reported at a few of the lowest ranges in fashionable occasions, negatively impacting producer margins for 2024.
Whereas the starkly decrease placement numbers would counsel a sizeable decline in turkey availability for Thanksgiving, inventories of complete turkeys in chilly storage had been up about 4% YoY, after they peaked in September this yr, at 246 million kilos. However that contrasts with roughly a 100-million-pound decline when put next with 2018, suggesting the market is extra accepting of smaller provides of complete birds. Equally, inventories of hams in chilly storage had been in line YoY, however down simply 61 million kilos vs. 2018 peak.
Turkey trade will undergo as shopper demand shifts throughout Thanksgiving
So how will the market cope with a 160 million-pound-decline in mixed frozen complete turkey and ham availability from its peak in 2018? Traditions are altering; this is perhaps the “new norm” as consumption is trending downward for conventional center-of-plate choices. Entrepreneurs are being challenged to creatively market turkey meat and thrive by way of innovation. If shoppers have gotten snug with declining availability of complete turkeys across the holidays, producers ought to take into account extra carefully evaluating the general product combine.
Whereas complete turkey demand is perhaps slipping, the chance to develop consumption could also be elsewhere. Grinds have proven super power this yr. Floor turkey retail quantity gross sales are up 5.5% YoY and are at $1.9 billion by way of the 52 weeks ending Sept. 8.² Floor turkey is the second-largest floor class, solely behind floor beef. This strongly means that whereas the standard imagery of turkey could also be Norman Rockwell’s iconic “freedom from need” portray, the U.S. shopper notion of turkey is altering.
